What you should know about Quebec Pension Plan payments

MONTREAL - Here is a column suitable for clipping and posting on your fridge or sticking in your agenda if you are expecting government pension cheques in 2012.

This year, recipients of the Quebec Pension Plan (QPP) (retirement, disability, orphan’s, surviving spouse’s pensions) can expect to receive their payments the last working day of each month.

Specifically in 2012, these dates will be Jan. 31, Feb. 29, March 30, April 30, May 31, June 29, July 31, Aug. 31, Sept. 28, Oct. 31, Nov. 30 and Dec. 28. The maximum monthly amounts for Quebec retirement pensions beginning in 2012 will be $986.67 for those age 65; $690.67 for those age 60 (70 per cent of the age 65 amount); or $1,282.67 for those age 70 (130 per cent of the age 65 amount). By comparison, these amounts in 2011 were $960 (age 65), $672 (age 60) and $1,248 (age 70), respectively. The maximum monthly surviving spouse’s pension for those age 45 to 64 will be $815.47 and for those age 65 or over, they can anticipate $592 per month if they are not receiving the retirement pension.

It should be noted that QPP benefits are taxable. Quebec residents wishing more information about these benefits can call the Régie des rentes du Québec at 1-800-463-5185 or can apply for the benefits online at rrq.gouv.qc.ca.

For those who receive pension benefits under the federal Old Age Security (OAS) program, those payments can be automatically deposited into bank accounts in Canada and the United States on Jan. 27, Feb. 27, March 28, April 26, May 29, June 27, July 27, Aug. 29, Sept. 26, Oct. 29, Nov. 28 and Dec. 20, 2012. The Old Age Security pension is a monthly benefit available, if applied for, to most Canadians 65 years of age or over.

To qualify for an Old Age Security pension, in addition to being age 65 or older, they also must be a Canadian citizen or legal resident of Canada on the day preceding the application’s approval or, if no longer living in Canada, must have been a Canadian or legal resident of Canada on the day preceding the day he or she stopped living in Canada.

Furthermore, if they are a resident of Canada at the time of application, they must have lived in Canada for at least 10 years after turning 18. For OAS applicants living outside of Canada, they must have lived in Canada for at least 20 years after turning 18 to qualify.

If one is not covered by either of these two scenarios, they may still qualify for some type of pension since Canada has social security agreements with many countries. For more information on OAS, you can call Service Canada at 1-800-277-9914 or consult the Service Canada website at servicecanada.gc.ca.

The maximum OAS monthly benefit payment for the first quarter in 2012 will be $540.12, which includes the new top-ups for the Guaranteed Income Supplements (GIS) and the Allowances effective July 1, 2011. OAS pension payment rates are reviewed and adjusted, if necessary, in January, April, July and October to reflect any increases in the cost of living as reflected by the Consumer Price Index. The average monthly OAS benefit has been $508.35 since October 2011. Unfortunately for those pensioners with individual net income that exceeds $69,562, they will have to repay part or the entire maximum OAS pension amount.

This is commonly referred to as the “clawback” of OAS. The repayment amounts are generally deducted from these pensioners’ monthly payments before they are issued. The entire OAS pension is clawed back when a pensioner’s net income reaches $112,772 or higher. OAS benefits are also taxable.

John Archer is an investment adviser with RBC Dominion Securities in Montreal.

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